In a joint letter today, the American Bankers Association and eight banking and credit union associations urged the Federal Reserve to reject merchant requests for further limits on debit card interchange fees in Regulation II, saying such regulatory action could negatively affect the sustainability and affordability of core deposit account services. The Fed board is scheduled to meet Wednesday to discuss the debit interchange fee cap.
The associations noted in the letter that the Fed has not shared details about the discussion or any proposed changes. They called on the Fed to share more details on the potential revisions before the board meets to discuss the rule, and to collect and publish comprehensive data on the costs of Reg II on regulated entities and the consumers. They also requested the opportunity to meet with the board and rebut assertions made by merchants, which are “riddled with errors, misleading statements and false comparisons that appear designed to deceive” and ignore the effects Reg II has already had on consumers.
“As in the merchant groups’ litigation against the Federal Reserve on Regulation II, there is consistent cherry-picking of facts and omission of ‘inconvenient evidence’ that contradicts their advocacy efforts,” the groups wrote. “We urge the board not to be misled. Contrary to merchant talking points, Regulation II has caused significant real-world economic harm to our members and their customers—and its recent expansion by the board is compounding that harm. The Durbin Amendment’s ‘exemption’ of smaller financial institutions has proven to be largely illusory, as the Federal Reserve’s own data shows that regulatory thresholds in the interchange market do not insulate smaller issuers from harm.”